How to Stop Garnishment of an Unpaid Car Note
When a finance company approves your loan, you are expected to repay the loan in installment payments. If you default on the loan agreement, they can garnish your wages to recover the unpaid debt. This concept is also true if you default on your car note. Along with repossessing the vehicle, the finance company reports the unpaid loan to credit bureaus and can seek a court order to garnish your wages. You can, however, take measures to stop them from garnishing your wages.
Other People Are Reading
Instructions
-
-
1
Understand that if the car loan is in your name, you are responsible for the amount owed. Even if you purchased the car for someone else who is making the payments for you, the finance company will hold you liable because they loaned the money to you, not the other person. If you are a co-signor on the loan, you are responsible for the loan as well.
-
2
Pay off the total amount owed in a lump-sum payment. Generally, if you are making a complete payment, the collection agency can offer you a settlement amount, which is considerably lower than the original amount owed. In an attempt to collect the debt fully, they might suggest that you borrow the money from a friend or family member, or use a credit card -- these options can put you deeper into debt, and credit card payments can have hefty interest rates attached.
-
-
3
Ask the collection agency to stop the garnishment and put you on a payment plan. Note that while this option is possible, it can also be unlikely. Typically, when a lender imposes a garnishment, it is because they have tried and failed to get you to pay the debt using other collection methods. Now that they have obtained a judgment against you, they may be reluctant to lift it.
-
4
File for bankruptcy to stop the garnishment from continuing. If your wages are already being garnished, you cannot recover what you have already paid. However, once you file for bankruptcy, all debt collection efforts cease including your wage garnishment. Bankruptcy results in your loan and debts being consolidated so you pay one affordable payment. A debt relief agency can help you with filing for Chapter 7 or Chapter 13 bankruptcy.
-
5
Provide your payroll department with proof of bankruptcy or any payment agreement you have made with the collection agency to stop the garnishment. Note that for legal reasons the payroll department may be unwilling to stop the garnishment unless they have written proof from the source. The agency performing the bankruptcy or the collection agency should send your employer a copy of the final paperwork via mail or certified mail. Some employers will accept your copy as long as they can verify its legitimacy.
-
1
